“From Underdog to the Top: Keys to Competitive Growth and Gaining Share” with SAP

So hi everybody, my name is Markus Vant and this is Pam Chance. We're both part of SAP. SAP is best known for enterprise applications, more specifically ERP or enterprise resource planning applications, which is a category we created over 50 years ago. As many of you know, an ERP application runs the backbone of any modern enterprise. It manages processes like financials, procurement, sales, inventory, manufacturing, amongst many other things. And so the question is, what are we doing here talking to you guys? Because what did Pam and I know about starting a business? And the truth is, you know, we're best known for working with very large companies, most of the largest companies in the world. But we don't know much about building a new business from scratch like many of you may. But we do know about building a business within a business because we're in the process of building our cloud ERP business within SAP. SAP. See, SAP overall is transforming. We've already evolved into a cloud company. The majority of our revenues are built based on our cloud portfolio, and we're growing rapidly. We're building our presence in the small and medium enterprise space, or the SME space. And many of you may not know it, but 80% of our customers are actually in that SME space. It's a space where we need to build our presence and where we need to change the hearts and minds and make sure we— people understand that we can deliver affordable solutions in that space. And it's a space where we know we're gonna face formidable competition.

We are also engaging with the market. So particular to the market, we're understanding our mid-market prospects and private equity firm needs. We're learning the similarities and differences between large enterprise companies and small and medium business. We also understand that the market is evolving, and even the small and medium-sized customers need to be able to grow globally and also be able to respond quickly with important insights. We're learning. We're learning from our successes and our failures along the way, and we're here to tell you today what we've learned and what we've learned from our customers. One of the first key areas of learning is around focus. And I know that might seem obvious to you, but it's really tempting to touch everything. But we've learned that it's really important to focus. One, our target audience, our target market is where we're placing a key focus. And we're also ensuring that our message is aligned to that key market. We've typically been in the large enterprise space. But with our SaaS solution, we're really focused on that new small and medium-sized business. Business. We're also ensuring that with our content that we're really leaning in on our industry knowledge and having industry-targeted content for the industries that we're targeting our solution for. Also regarding focus, we're focusing our offering to ensure that it's competitively priced and that we're bundling our solution effectively. Also, we're focusing in on ensuring that we have are meeting those needs with the references, and that we're making sure that those references are really aligned to customers in similar markets, similar growth curves, similar business outcome needs, similar size is the area of focus. Next we have our fundamentals. So what we're basically saying is with regard to fundamentals, we need to understand what are we wanting to sell and who are we wanting to sell 2, what does the market need? So we've really taken an outside-in approach. And we've really been reflective around knowing that we need to change our go-to-market strategy for the small and medium businesses. And what I mean by that, an example is the buying persona. We've learned that the buying persona for mid and small customers is more— is different from large enterprises. So we're engaging with CFO and founders. Also, we need to understand the income, the outcomes that our customers are really wanting to focus on. So that is what we're focused on, and we want to do what we do best. So the industry knowledge, our robust financials, our global reach and integration are very key.

And lastly, we've learned it's about customer success. Renew is the lifeblood of any SaaS business, and ERP is no different, except there's a lot of things that can go wrong in an ERP project that may not be the fault of the application itself. And so we have to make sure that we are partnering with our ecosystem to deliver high-quality services to help implement these solutions successfully, as well as have high-quality post-go-live services to make sure our customers are realizing the benefits, benefits that we've promised them, and that we're keeping an eye on those KPIs and whether it's day sales outstanding or reducing inventory or increasing sales or increasing operational efficiency. All of those need to be factored into that post-go-live process to make sure that we have happy customers that continue to renew. And then lastly, it's about our own internal KPIs. 3 years ago, we started measuring ourselves on what we call the current cloud backlog. And this is a metric similar to NRR, but a little different. Where we take contracted bookings, contracted renewals, and then contracted attrition to measure the overall health of the business. So Pam, what have we learned from our customers?

What we learned from our customers— our customers want increased business agility. They want a cloud ERP with driven transformation. They want a solution, an end-to-end solution, that's easy to use, easy to implement, and adapt to their changing landscape is very important to them. Also, they want a solution where fundamentally top of mind is to drive growth and to drive transformation. So they want a solution that allows them to go into new markets, have new business outcome-based models, subscription business models as well. They want a solution that's out of the box, that's built on best practices, but also a solution that's deep with the industry verticalization is really, really important. They do not want to have— they want to avoid technical debt. They do not want to do-it-yourself solution, but they do want a solution that allows them to extend the solution and have build their own breakthroughs, but also be cloud compliant in building it so they have competitive advantage.

And included in driving innovations, we're also investing heavily in AI and ML to essentially improve the throughput with fewer resources. And in doing so, we're leveraging some basic technologies like situation handling to drive awareness to the end user that there is human intervention required, but then also using more advanced features like MA— AI and ML to to fully automate process steps within that end-to-end process. And then it's also about scale and expansion. So customers that are dealing with a SaaS solution expected to scale technically, whether they have 25 employees or 25,000 employees. And they also wanna scale vertically, like Pam mentioned, up and down the value chain, maybe looking at new business models. But then they also need to scale horizontally into new markets, new geographies while staying compliant, whether it's Canada or Colombia. And they want it all done yesterday. So cost, risk, and time are of the essence, and our cloud ERP solutions have a unique value proposition there because we're providing preconfigured solutions that we can implement much more quickly at a lower risk. So to bring this all home, I wanted to just mention a sample customer of ours, Wireless Car. This is a customer that was founded in— or a company that was founded in Sweden in 1999. They've been growing steadily and since been acquired by Volkswagen in 2018. And they bought our solution recently and implemented it successfully. They're now running essentially— they're part of the automotive business doing digital connected cars. And they're now managing over 10 million vehicles in over 100 countries. But it begs the question, when is the right time to be looking at building out an enterprise resource planning system for your company? Sooner or later, companies need an enterprise application that is essentially going to help them focus on their core business, not on some of the core commodity business processes, help them expand looking at new business processes, new business models, and also helping them scale both vertically and horizontally. So if any of you are in that situation, please come, come talk to us. So Pam, what are the key takeaways?

The key takeaways is one, that we really listen to our customers and learn from them. We focused on business agility, scale, ensuring that we have solutions that are driven with growth and innovation, and we're really focused on customer success. Specifically around selling for your business outcomes, ensuring we're working together as trusted partners, and working with our broad ecosystem of partners. And finally, we just wanted to thank you for your time today. And if you'd like to visit us further, come see us at our booth SG245 in the West Hangar near the catena. Thank you.